Policy Analysis No. 716

A Rational Response to the Privacy “Crisis”

By Larry Downes
January 7, 2013

What passes today as a “debate” over privacy lacks agreed-upon terms of reference, rational arguments, or concrete goals. Though the stars are aligning for a market in privacy products and services, those who believe that rapidly evolving information technologies are eroding privacy regularly pitch their arguments in the direction of lawmakers, pushing for unspecified new rules that would cast a pall over innovation. These calls for ill-considered new laws threaten the remarkable economic conditions that have fueled the Internet revolution up until now.

Americans are torn between two historical and cultural traditions about privacy. The Puritan vision of true information transparency on the one hand lives uncomfortably with the frontier’s promise of anonymity and personal reinvention on the other. When the Puritan vision encroaches too quickly on the frontier vision, it produces an emotional response—the “creepy factor”—that tends to recoil from innovative new uses of information. But “creepiness” often abates as familiarity grows.

We cannot solve the privacy “crisis” by treating information as the personal property of those to whom it refers or by adapting the systems for protecting copyright, patent, and other so-called “intellectual property” to personal information. But a related body of law explains and rationalizes what is going on with personal information and privacy: the more flexible solution of information licensing.

The licensing model recognizes that most information with economic value is the collaborative creation of multiple sources, including individuals and service providers. Rather than establish enforceable title to property, it assumes joint ownership and licenses specific uses based on mutual exchange of value.

Licensing is already implicit in most information exchanges on the Internet today. With minor enhancement, it could resolve many of today’s perceived crises without resorting to inflexible and overreaching legislation.

Larry Downes is an Internet industry analyst. He is the author of the Business Week and New York Times business bestseller, Unleashing the Killer App: Digital Strategies for Market Dominance and, most recently, of The Laws of Disruption: Harnessing the New Forces that Govern Business and Life in the Digital Age.